12/29/24

Weekly Market Recap

We have two shortened trading weeks back-to-back. Last week, stocks only traded for half a day on Christmas Eve and took Christmas Day off. This week, the stock market will be closed on Wednesday, New Year's Day. As we approach the end of the year, it's interesting to look at which investments did well in 2024 and which didn’t perform as well. Obviously, U.S. stocks have had a great year and will likely end up around 25%. From a sector perspective, communication services, financials, and consumer discretionary were the top performers. On the other side, materials, healthcare, energy, and real estate were the worst performers, with low single-digit returns. The 10-year yield moved quite a bit in 2024, starting the year at 3.86%, then rallying as high as 4.70% as early as April. After hitting a high in April, rates fell to a new yearly low of 3.6% in September, before rallying to 4.60% by year-end. Since rates ended the year higher than they started, bond prices fell roughly 2.50%. However, the coupon payments of bonds gave bond investors a positive year, with a total return of around 1%. It's hard to get excited about a 1% return when stocks are firing on all cylinders, but bonds exist for the years when stocks fail to deliver.

Chart of the Week

The chart of the week shows the current weights of major stock markets in the MSCI All Country World Index. This index is designed to track the performance of the global stock market. It is a market-cap-weighted index, meaning countries with the largest market values have a heavier weight in the index. These weights change over time as markets rise and fall. Notice how high the weight of U.S. stocks currently is in the index. This is due to the U.S. stock market’s phenomenal run since 2009. Also, notice Japan, which had a 40% weight in the late '80s but has now dropped to only 5%. What do the next 20 to 30 years hold for the global stock market? No one knows, but if history is any guide, the weights in the global market index will continue to change.

Written by:

Ben Rones, CFA®

Senior Analyst at R&R Financial

The commentary in this newsletter is for informational purposes only and should not be taken as personalized investment advice

Chart of the week Source: FactSet, MSCI, Standard & Poor’s, J.P. Morgan Asset Management

Guide to the Markets – U.S. Data are as of December 19, 2024.